Detecting and preventing fraudulent transactions is a concern for many organizations that process payments. Indeed, such organizations may apply various rules when processing transactions that operate to deny transactions that seem fraudulent, while allowing other transactions that seem legitimate to be completed. In implementing these rules, however, the payment processor's interest in denying transactions that seem fraudulent may need to be balanced with a competing interest in providing users with a convenient experience, because rules that deny too many legitimate transactions along with the fraudulent ones may lead to a negative user experience. On the other hand, implementing rules that are too lax may expose the payment processor to heightened fraud and consequent financial losses.
A table showing these competing interests is illustrated in FIG. 1A. As seen in this table, it may be desirable for fraud rules to allow legitimate transactions and block fraudulent transactions. However, blocking legitimate transactions (e.g., with fraud rules that are inaccurate) may be considered one type of error in processing transactions, and allowing fraudulent transactions (e.g., with fraud rules that are ineffective) may be considered another type of error in processing transactions. Aspects of the disclosure provide more convenient and effective ways of mitigating risk and fraud in processing transactions.
Embodiments of the invention address these problems, individually and collectively.